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COMMENT
Reliance Industries (RELI.BO) Rs882.15
Equity Research
First Take: 1Q in-line; lower petrochem, KG-D6 gas remain in focus
News
Reliance Industries (RIL) reported 1QFY12 PAT of Rs56.6 bn, up 17% yoy
and in-line with GS/Bloomberg consensus estimate of Rs56.6 bn/Rs57.2bn.
RIL’s EBITDA of Rs99.3 bn, up 6.3% yoy, is below our estimate of Rs104.6
bn, primarily owing to weak petrochem margins, in-line with qoq weak
regional margins. We note that other income at Rs10.8 bn was higher than
expected while interest expense at Rs5.4 bn came below our estimate.
Cash profit of Rs 90.1bn was up 5.5% yoy. Further, gross refining margin at
US$10.3/bbl was slightly higher than our expectation, while E&P results
were in-line with our estimates.
Analysis
While 1Q results were in line with our expectation, weaker operating
profits were offset by higher other income and lower interest expenses. We
believe, as expected results were adversely affected by decline in
petrochem margins (EBIT margin of 12.1% vs. 14.8% in 1QFY11) and lower
gas production volumes at KG D6 (declined 18% yoy). We look forward to
further updates on guidance on D-6 gas volumes over the medium term
and believe approval of the BP deal would provide RIL access to BP's
deepwater expertise and could help grow volumes at the D6 block. We
also look forward to company guidance on the next level of growth and
their strategy for deployment of US$10.2bn cash in hand.
Implications
We place our estimates and price target under review pending the
conference call.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
COMMENT
Reliance Industries (RELI.BO) Rs882.15
Equity Research
First Take: 1Q in-line; lower petrochem, KG-D6 gas remain in focus
News
Reliance Industries (RIL) reported 1QFY12 PAT of Rs56.6 bn, up 17% yoy
and in-line with GS/Bloomberg consensus estimate of Rs56.6 bn/Rs57.2bn.
RIL’s EBITDA of Rs99.3 bn, up 6.3% yoy, is below our estimate of Rs104.6
bn, primarily owing to weak petrochem margins, in-line with qoq weak
regional margins. We note that other income at Rs10.8 bn was higher than
expected while interest expense at Rs5.4 bn came below our estimate.
Cash profit of Rs 90.1bn was up 5.5% yoy. Further, gross refining margin at
US$10.3/bbl was slightly higher than our expectation, while E&P results
were in-line with our estimates.
Analysis
While 1Q results were in line with our expectation, weaker operating
profits were offset by higher other income and lower interest expenses. We
believe, as expected results were adversely affected by decline in
petrochem margins (EBIT margin of 12.1% vs. 14.8% in 1QFY11) and lower
gas production volumes at KG D6 (declined 18% yoy). We look forward to
further updates on guidance on D-6 gas volumes over the medium term
and believe approval of the BP deal would provide RIL access to BP's
deepwater expertise and could help grow volumes at the D6 block. We
also look forward to company guidance on the next level of growth and
their strategy for deployment of US$10.2bn cash in hand.
Implications
We place our estimates and price target under review pending the
conference call.
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